Discussion
If you’ve followed “FedXwit” for the last two years you know Nick Timiraos and Conor Sen are co-captains of Team Soft Landing. The exchange below illustrates well their emerging signs of distress.
The fact of the matter is running a 5-10% of GDP fiscal deficit means inflation will not only remain above to well-above target but will accelerate hard on the back of a broad easing of financial conditions, such as the easing seen since October 27, 2023.
FRB Atlanta recently updated its inflation dashboard to reflect where the various alternative measures of inflation need to fall to in order to be consistent with 2% inflation. The current set-up paints a dire picture for Team Soft Landing, with 9 out of 9 measures are above their target. No bueno.